Chapter 19 : Anti-Money Laundering
There are three major anti-money laundering (“AML”) legal instruments (one law and two Prakas) that are generally applicable to money laundering prevention and enforcement in Cambodia. Due to transparency issues in the process of law enforcement and the court system, no estimate can be made regarding the frequency of enforcement actions regarding money laundering. However, evidence of an increased focus on AML policies are indicated by the 2012 creation of the National Coordination Committee on Anti-Money Laundering and Combating the Financing of Terrorism. The key role of the committee is to ensure effective implementation of AML laws, including compliance with the international Financial Action Task Force on Money Laundering (“FATF”) recommendations, the Asia/Pacific Group on money laundering recommendations and all United Nations anti-money laundering initiatives. The Royal Cambodian Government has stated its continued commitment to preventing money laundering and AML laws continues to develop.
A. Law on Anti-Money Laundering and Combating Terrorism Financing (30 April 2007) (the “AMLCTF”).
The AMLCTF provides the legal framework for money laundering and terrorism financing prevention. The AMLCTF (as amended, the amendment is discussed further below) defines, for the purposes of law, the act of money laundering and creates obligations for “reporting entities” and their employees in Cambodia. “Reporting entities” broadly includes banks, financial services institutions, money exchange and remittance services, dealers of precious metals and stones, real estate companies, casinos and professional services including lawyers and accountants (reporting entities may be referred to as a “company” or “companies”). Reporting entities who engage in the following business activities are subject to the AMLCTF;
- Buying and selling real estate;
- Managing client money, securities, or other assets;
- Managing bank accounts;
- Organizing contributions of company capital;
- Forming legal entities for the purpose of buying or selling other entities; or
- Acting in trust or as a company preparing for or carrying out transactions for a client, specifically, (i) acting as a formation agent of legal persons, (ii) acting as or arranging for another person to as a director, partner, or similar position for a legal entity, iii) providing a registered address for another legal entity, (iv) acting or arranging another to act as a trustee, and (vi) acting as or arranging another to act as a nominee shareholder for another person.
Some of the most important obligations created by the AMLCTF are;
- The board of directors of a company must establish internal controls to prevent money laundering which includes appointing one or more management-level compliance officers;
- Each compliance officer is responsible for establishing policies and procedures, including creating a manual for employees, to prevent money laundering and terrorism financing and ensure that the staff act consistent with the policies;
- A company shall provide training to its staff on anti-money laundering and terrorism financing policies, procedures, suspicious activities, and relevant law;
- A company must adequately identify its customers, identify the nature of its business relationship, identify the beneficiary of such business, and conduct on-going due diligence related to the same;
- A company shall maintain records of its customers’ identification and transactions for five years;
- A company has the responsibility to report to the CAFIU (defined below) suspicious transactions, any transaction conducted by persons identified by the United Nations Security Council, any transaction of $10,000 or more in cash, or a series of small transactions whose aggregate cash transfer is more than $10,000, among other situations requiring reports; and
- A company who cannot identify who the customer is, or the beneficial owner of the relevant account or transaction is, or otherwise suspects money laundering or terrorism financing shall not conduct such business with the customer.
The Cambodian Financial Intelligence Unit (“CAFIU”) is the regulator of anti-money laundering activities and terrorism financing prevention in Cambodia. CAFIU is responsible for analysing information submitted to it and sending relevant information to law enforcement authorities. The National Coordination Committee on Anti-Money Laundering and Combating Financing Terrorism is a sub-group of CAFIU.
The amendment to the AMLCTF amends the definition of the criminal offence of money laundering, its associated penalties, offences for knowingly violating other obligations created by the AMLCTF and the penalties associated with such violations. Updated violations include knowingly failing to report large cash transactions and suspicious transactions and “tipping off,” which is the disclosure of a reporting entities’ obligation to report a transaction to an unauthorized person. Penalties include confiscation of property, imprisonment and fines.
B. The Prakas on Anti-Money Laundering and Combating the Financing of Terrorism (30 May 2008) and the Prakas on Anti-Money Laundering and Combating the Financing of Terrorism Relating to All Reporting Entities Not Regulated by the National Bank of Cambodia (21 December 2010).
Together, the two above-mentioned Prakas cover “reporting entities” that are regulated by the National Bank of Cambodia (“NBC”) (the 2008 Prakas) and those that are not regulated by the NBC (the 2010 Prakas). The two Prakas are substantially similar and clarify the policies and procedures that are required by the AMLCTF. Notably, the Prakas;
- Impose specific requirements for conducting business with “politically exposed persons”;
- Require reporting entities to have information management systems in place;
- Require reporting entities to have a policy manual which contains the reporting entities’ procedures to comply with the law;
- Specify the acceptable types of identification and the procedures for identifying individual and corporate customers. For corporate customers, this includes conducting a corporate search and other due diligence regarding the identification of the beneficiaries when conducting business with a corporate entity;
- Require the company to ensure its corporate customers are not in the process of being dissolved or wound up; and
- Prohibit doing business with shell entities that engage in no commercial business of their own regardless of whether the shell entity has the legal capacity to enter into such a transaction.
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